NetApp Breaks Out of 2-Year Downward Trend
Some investors prefer to focus on fundamental analysis while others prefer technical analysis. Still others prefer to use a combination of the two analysis styles. This is where Tickeron falls, using both analysis styles. In our opinion, technical factors tend to have a greater influence over the short term while fundamentals are more important over the long run.
Sometimes we see stocks with good fundamentals that enter a downward trend and have a hard time breaking out of it. That is what happened with computer hardware manufacturer NetApp (NTAP). NetApp peaked up near $82 back in September ’18—the prices on the chart below are adjusted for dividend payments. The downward cycle started and over time a trend channel formed that defined the different cycles within the overall downward trend. The stock would eventually hit a low of $33.50 back in March.
The rally off of the March low has moved NetApp back above $60 and it appears that the most recent pop has moved the stock out of the downwardly sloped channel it was caught in for two years.
I have written about NetApp several times over the last few years and I can tell you that the fundamental indicators have been good during this whole time—even as the stock was trending lower. From an article I wrote in November ’18, I can tell you that the company was averaging EPS growth of 21% per year and was expected to see earnings grow by 24% in fiscal 2019.
NetApp’s profitability measurements at the time were impressive. The return on equity was 40.6% and the profit margin was at 19.6%. The operating margin was at 17.15% back then and that was above average compared to other companies.
Flash forward to the current readings and we see that the ROE is at 141.7%, the profit margin is at 20.9%, and the operating margin is 16.6%. These are all still at very impressive levels and instead of a P/E ratio up at 94 like it was in 2018, the P/E ratio is under 20 now.
The decline in the stock caused the sentiment to shift from a slightly bearish position to an extremely bearish position over the last two years. From the article in 2018 I can tell you that there were 29 analysts following the stock with 14 “buy” ratings, 13 “hold” ratings, and two “sell” ratings. At this time there are 27 analysts covering the stock with eight “buy” ratings, 17 “hold” ratings, and two “sell” ratings. The buy percentage dropped from 48.3% to 29.6%.
Short sellers have also increased their bearish posture. In November ’18 the short interest ratio was 3.89 and now it is 8.4. The average short interest ratio falls in the 3.0 range, so the reading from two years ago was slightly higher than average and the current reading is tremendously higher than average.
In addition to the factors listed above, TIckeron's AI platform found additional bullish signals for the stock.
NTAP sees MACD Histogram just turned negative
NTAP saw its Moving Average Convergence Divergence Histogram (MACD) turn negative on July 07, 2025. This is a bearish signal that suggests the stock could decline going forward. Tickeron's A.I.dvisor looked at 47 instances where the indicator turned negative. In of the 47 cases the stock moved lower in the days that followed. This puts the odds of a downward move at .
Technical Analysis (Indicators)
Bearish Trend Analysis
Following a 3-day decline, the stock is projected to fall further. Considering past instances where NTAP declined for three days, the price rose further in of 62 cases within the following month. The odds of a continued downward trend are .
Bullish Trend Analysis
The Stochastic Oscillator suggests the stock price trend may be in a reversal from a downward trend to an upward trend. of 53 cases where NTAP's Stochastic Oscillator exited the oversold zone resulted in an increase in price. Tickeron's analysis proposes that the odds of a continued upward trend are .
The Momentum Indicator moved above the 0 level on July 17, 2025. You may want to consider a long position or call options on NTAP as a result. In of 79 past instances where the momentum indicator moved above 0, the stock continued to climb. The odds of a continued upward trend are .
Following a 3-day Advance, the price is estimated to grow further. Considering data from situations where NTAP advanced for three days, in of 345 cases, the price rose further within the following month. The odds of a continued upward trend are .
NTAP may jump back above the lower band and head toward the middle band. Traders may consider buying the stock or exploring call options.
The Aroon Indicator entered an Uptrend today. In of 312 cases where NTAP Aroon's Indicator entered an Uptrend, the price rose further within the following month. The odds of a continued Uptrend are .
The Tickeron SMR rating for this company is (best 1 - 100 worst), indicating very strong sales and a profitable business model. SMR (Sales, Margin, Return on Equity) rating is based on comparative analysis of weighted Sales, Income Margin and Return on Equity values compared against S&P 500 index constituents. The weighted SMR value is a proprietary formula developed by Tickeron and represents an overall profitability measure for a stock.
The Tickeron Profit vs. Risk Rating rating for this company is (best 1 - 100 worst), indicating well-balanced risk and returns. The average Profit vs. Risk Rating rating for the industry is 78, placing this stock slightly better than average.
The Tickeron Seasonality Score of (best 1 - 100 worst) indicates that the company is fair valued in the industry. The Tickeron Seasonality score describes the variance of predictable price changes around the same period every calendar year. These changes can be tied to a specific month, quarter, holiday or vacation period, as well as a meteorological or growing season.
The Tickeron Price Growth Rating for this company is (best 1 - 100 worst), indicating fairly steady price growth. NTAP’s price grows at a lower rate over the last 12 months as compared to S&P 500 index constituents.
The Tickeron Valuation Rating of (best 1 - 100 worst) indicates that the company is fair valued in the industry. This rating compares market capitalization estimated by our proprietary formula with the current market capitalization. This rating is based on the following metrics, as compared to industry averages: P/B Ratio (21.786) is normal, around the industry mean (6.612). P/E Ratio (23.925) is within average values for comparable stocks, (62.645). Projected Growth (PEG Ratio) (0.944) is also within normal values, averaging (55.962). Dividend Yield (0.019) settles around the average of (0.030) among similar stocks. P/S Ratio (3.636) is also within normal values, averaging (12.290).
The Tickeron PE Growth Rating for this company is (best 1 - 100 worst), pointing to worse than average earnings growth. The PE Growth rating is based on a comparative analysis of stock PE ratio increase over the last 12 months compared against S&P 500 index constituents.
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General Information
Provides data management and storage solutions
Industry ComputerPeripherals
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